The worst-kept dirty secret of city's housing societies may get a legal solution
Nishant building at Altamount Rd
It took over eight years for the Tulsianis to have their name incorporated into their society share certificate in a plush residential building in Altamount Road, Kemps Corner. The Tulsianis claimed that the society refused to transfer the shares in their name until a sum of Rs 21 lakh was paid towards flat transfer charges (disguised as building repair funds), besides the legal transfer charges of Rs 25,000.
This practice, according to property lawyers, is still rampant in many reputed societies at Nariman Point, Cuffe Parade, Pedder Road, where hefty amounts of money are charged even today at the time of transfer of flats. Nishant Building, a ground-plus-eleven storey building (close to Antilia), is where the Tulsianis own a four BHK flat spread across 3,000 square feet (carpet). They claim it was only after they paid a whopping R21 lakh to Shree Satidham Co-operative Housing society towards repair funds seven months ago, other than legal transfer charges of Rs 25,000, that they got the shares transferred in their name.
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'Building repair fund'
"We had bought a flat in Nishant building and the society refused to transfer it to me giving some or the other excuse. I have paid a total of R51 lakh - which includes R21 lakh disguised as 'building repair fund' and another R30 lakh in outstanding dues (for eight years) along with interest @21%. The dues were not paid because of the current dispute, but they refused to budge," said Prakash Tulsiani, a textile industrialist. "The flat was transferred to my name only after I paid R51 lakh. I was told to pay R21lakh as flat transfer charges besides the R25,000 legal flat transfer charges, and told the R21 lakh would be shown as building repairs fund. Besides this I have also paid R2,500 per month for my Mercedes as car parking charges," Tulsiani, who has gone to court over the issue, added.
Advocate Vinod Sampat, who represents Tulsiani said, "The flat is owned by Prakash Tulsiani, 64, and his family was shocked to learn that they had to shell out R21 lakh toward share transfer charges. They did not agree with this and constantly communicated with the society office bearers but in vain. We even requested the rate be reduced, but even that they did not agree to. Due to the dispute, the Tulsianis stopped paying the society maintenance (for eight years), which was a quarterly billing of over Rs 30,000."
Sampat added, "The Maharashtra Cooperative Societies Act 1960, read with bylaw no 38 (d) stipulates that the maximum amount that can be collected by the society towards the share premium account cannot exceed more than R25,000. In the earlier years (20 years ago) transfer charges were R1 and that also was just a token for the involvement of the society. The transfer is a contract between the outgoing member and the incoming member, and the involvement of the society is confirmed by charging Re 1 as transfer fees a few decades ago."
'An act of extortion'
He continued, "It is nothing but an act of extortion. Some time ago, even film stars were harassed by the New India Cooperative Housing society at JVPD for 50 per cent of unearned income. The prices of the property were minimal in the early 1960s and JVPD societies used to have their own bylaws, asking for unearned income at the time of transfer of shares, which raised the house prices. The new purchaser doesn't want to create a wrong impression and has to carry out interior works - which society officer bearers object to. Many times car parking is not allotted by the society if the share premium is not paid."
Reputed societies in South Mumbai, Nariman Point, Cuffe Parade, Pedder Road, even today charge hefty amounts at the time of transfer. Sampat further said, "The nomenclature given by the society for collecting hefty amounts is of no legal relevance. The intention has to be seen. Any collection of such amount (towards other headings) in my opinion is an act of extortion; criminal breach of trust for which criminal prosecution can be initiated against the managing committee members.
Surprisingly, the society auditors and officials at the cooperative department do not initiate action, unless someone lodges an official complaint with them. The need of the hour is to amend the audit reports submitted by such societies, whereby such illegalities and/ or irregularities are immediately pointed out by the concerned auditors. This will result in more transparency. Members of such societies also are silent spectators to such wrongful acts, as this results in the reduction of their monthly contribution.
Usually, it is seen that when such hefty amounts are collected under other heads towards transfer charges, they are usually used by society for major expenses, thereby reducing the burden on other flat occupants. Sampat, "The argument raised by the school of thought in favour of collecting transfer charges is that the society is the owner of the property and because of the maintenance of the property, the seller is able to make a huge profit when he sells the flat. They feel there is nothing wrong if a reasonable sum is collected by the society, though it is legally a wrong practice and can be challenged in the court of law."
The other side
When contacted, the society manager Prafulbhai Sata, who has been working with Shree Satidham Co-operative Housing society for the past 20 years said, "We have collected only R25,000 towards share transfer charges as per the norms and nothing more." When asked the reason for collecting R21 lakh towards building repair fund, Sata said, "I am not authorized to speak, you will need to talk to the chairman or secretary, I won't be able to comment anything further." When asked to share the office bearers' contact details, he refused to do so.
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